When is a death an accidental death?  When it results from an event or circumstance that an ordinary person would regard as an accident.  An insurance company cannot add something to it definition of accident after a claim is made.  The United States Court of Appeals for the Sixth Circuit rules here that life insurance benefits for an accidental death must be paid where the death results from accidentally running a stop sign. 

United States Court of Appeals for the Sixth Circuit

Kovach v. Zurich American Insurance Company
No. 08-4512; Decided November 13, 2009

Judge Gilman wrote the Court's Opinion:

On November 7, 2005, Thomas Kovach was riding his motorcycle while intoxicated, ran a stop sign, and collided with
another vehicle in the intersection. He sustained severe injuries that led to the amputation of his left leg below the knee. Mr. Kovach was insured under an accidental death and dismemberment (AD&D) insurance policy provided by his wife's employer (hereafter referred to as the Plan). He and his wife Rebecca filed a claim with Zurich American Insurance Company, the administrator of the Plan, for dismemberment benefits. Zurich denied the Kovaches' claim after determining that Mr. Kovach's injuries were caused by his drunk driving and therefore not covered as an "accidental" occurrence under the Plan.

The Kovaches brought a claim under the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001-1461 (ERISA), that challenged Zurich's denial of coverage. Applying a deferential arbitrary-and-capricious standard, the district court granted
summary judgment in favor of Zurich. On appeal, the Kovaches argue that (1) the district court should have applied a de novo standard of review because Zurich improperly delegated its decisionmaking authority to an outside lawyer, and (2) Zurich's denial of their claim was improper under either standard. Although we reject the Kovaches' first argument, we agree with their second. We therefore REVERSE the judgment of the district court and REMAND the case for the entry of a judgment in favor of the Kovaches.


A. The AD&D policy

Rebecca Kovach enrolled in the Plan through her employer, KeyCorp. Zurich, as the Plan Administrator, was responsible for the processing and payment of claims under the Plan and was the claims fiduciary. The AD&D coverage paid benefits for
losses, including dismemberment, resulting from an injury according to the following definition:

Injury means a bodily injury directly caused by accidental means which is independent of all other causes, results from a Hazard, and occurs while the Covered Person is insured under this Policy.

Although the term "accidental" is not defined, the Plan includes several explicit exclusions, including the following:

A loss shall not be a Covered Loss if it is caused by, contributed to, or resulted from:

1. Suicide, attempted suicide, or a purposeful self-inflicted wound;
. . .
7. Skydiving, parasailing, hangglinding [sic], bungeejumping,
or any similar activity . . . .

Mrs. Kovach's policy provided for up to $250,000 of coverage. In the case of an amputated limb, the policy paid $125,000. Mr. Kovach was covered under his wife's policy.

B. Mr. Kovach's accident and resulting amputation

On November 7, 2005, Mr. Kovach was involved in a collision while riding his motorcycle in Ravenna, Ohio. According to the crash report filed by the responding officer, Mr. Kovach ran a stop sign at a four-way intersection and was struck by a car.
Mr. Kovach was taken to Robinson Memorial Hospital in Portage County to be stabilized. Based on the severity of his injuries, he was then flown via Medivac helicopter to the Cleveland MetroHealth Medical Center. The doctors were unable to
save Mr. Kovach's left leg, which they amputated just below the knee.

Mr. Kovach's admission report from MetroHealth noted that a blood sample taken at Robinson Memorial Hospital after the accident and tested by an outside lab showed that Mr. Kovach had a blood alcohol content (BAC) of .148%-well over the
legal limit in Ohio of .08%. See O.R.C. § 4511.19(A)(1). MetroHealth took its own sample of Mr. Kovach's blood sometime after his arrival. Those results showed a BAC of .085% and also showed the presence of opiates and benzodiazepines. The Kovaches contend that the positive drug test was due to medically administered valium and morphine given to Mr. Kovach after the accident, a contention not refuted by the record.

C. Zurich's denial of the Kovaches' AD&D claim

Mr. Kovach and his wife timely filed a dismemberment claim with Zurich in December 2005. The claim was based on Mr. Kovach's below-the-knee amputation. Zurich subsequently retained the services of CS Claims Group, Inc., an independent
investigation firm, to obtain Mr. Kovach's hospital and toxicology records, as well as the records from all of his treating physicians. Upon receiving the MetroHealth records and noting Mr. Kovach's BAC, Zurich decreased its reserves on the claim from $125,000 to $10 in anticipation that the claim would be denied. Zurich then hired an attorney, Daniel Maguire, to review Mr. Kovach's file and to draft a denial letter based on the policy's provisions if Maguire agreed that the claim should be denied. The insurer's letter to Maguire noted that Mr. Kovach "was the operator of a motorcycle that appears to have run a stop sign and hit another vehicle in the intersection . . . [and] was intoxicated at the time of loss."

Maguire agreed with Zurich's inclination that the claim should be denied and prepared an opinion letter that discussed the applicable caselaw, concluding that no benefits were payable. Zurich subsequently authorized a denial of the benefits. It sent a denial letter to the Kovaches in March 2006 using language taken from Maguire's opinion letter. The denial letter explained that Zurich had concluded that Mr. Kovach's injury was not due to an "accident" under the terms of the Plan because Mr. Kovach (a) was driving with almost twice the legal BAC, (b) had tested positive for opiates and benzodiazepines, and (c) had, according to the police officer responding to the accident, run a stop sign and thereby initiated the crash. Zurich thus reasoned that the injury was a reasonably foreseeable consequence of driving while under the influence of alcohol and possibly drugs. Citing several federal decisions upholding the denial of AD&D benefits under allegedly similar circumstances, Zurich also concluded that the facts supported the application of the policy's self-inflicted-wound exclusion.

The Kovaches timely appealed Zurich's initial denial of the claim to the insurer's ERISA Review Committee. They submitted what they characterized as "newly discovered relevant evidence" in the form of Mr. Kovach's affidavit, which asserted that
the other driver, not he, ran the stop sign. Zurich responded by clarifying that the Kovaches were not presenting newly discovered evidence, but rather a different version of the events surrounding the incident. Zurich nevertheless noted that it had decided to stay the appeal in order to clarify the issue of which party was at fault for the collision.

To investigate the fault issue, Zurich again retained CS Claims Group, Inc. to obtain the Ravenna Police Department's final Traffic Crash Report. The report confirmed that Kovach had been cited for a stop-sign violation and had tested positive
for drugs (based on the MetroHealth test results). Zurich had previously seen only the initial accident report, which lacked these details. After reviewing this information, Zurich's ERISA Review Committee informed the Kovaches' counsel that it had affirmed the denial of benefits.

D. The lawsuit

The Kovaches filed a complaint in the United States District Court for the Northern District of Ohio in August 2007. They named both Zurich and Mrs. Kovach's employer, KeyCorp, as defendants. KeyCorp was dismissed as a defendant shortly
thereafter. The parties subsequently filed cross-motions for judgment based upon the administrative record. In September 2008, the district court issued an order upholding Zurich's denial of benefits. The Kovaches have timely appealed that order.

A. Standard of review

We review de novo the district court's disposition of an ERISA action based upon the administrative record, and apply the same legal standard as the district court. Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 613 (6th Cir. 1998). As discussed in Part II.B. below, the district court in this case appropriately reviewed the Kovaches' suit under the arbitrary-and- capricious standard because the Plan granted discretionary authority to Zurich as the plan administrator to interpret the Plan's terms and to determine its benefits. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111-15 (1989) (establishing the arbitrary-and-capricious standard of review in ERISA cases where the plan administrator has discretionary authority); Glenn v. Metro. Life. Ins. Co., 461 F.3d 660, 666 (6th Cir. 2006) (applying Firestone's standard of review).

Under the arbitrary-and-capricious standard, we must uphold the administrator's decision "if [the administrator's] interpretation of the Plan's provisions is ‘reasonable.'" Morrison v. Marsh & McLennan Cos., 439 F.3d 295, 300 (6th Cir. 2006) (citing Firestone, 489 U.S. at 111). But the arbitrary and capricious standard is not a "rubber stamp [of] the administrator's decision." Glenn, 461 F.3d at 661. Rather, it requires us to review "the quality and quantity of the . . . evidence and the opinions on both sides of the issues." McDonald v. W.-S. Life Ins. Co., 347 F.3d 161, 172 (6th Cir. 2003).

B. Zurich's retention of Maguire does not alter the applicable standard of review

The parties agree that the Plan gives Zurich discretionary authority to determine eligibility for benefits and to construe the terms of the Plan. As noted above, this vesting of discretionary authority in Zurich would typically lead us to apply an arbitrary-andcapricious standard of review. But the Kovaches argue that, even where a plan vests the administrator with discretion, a de novo review of claim determinations is required if an entity or person other than the one authorized by the plan renders the decision. See Sanford v. Harvard Indus., 262 F.3d 590, 597 (6th Cir. 2001) (holding that where "an unauthorized body that does not have fiduciary discretion to determine benefits eligibility renders such a decision," arbitrary-and-capricious review is "not warranted"). The Kovaches contend that de novo review should apply in this case because Zurich improperly delegated its discretionary authority to construe the Plan and determine coverage to Maguire, an outside attorney who was not authorized by the Plan to act in such a fiduciary capacity.

The district court properly rejected this argument. Nothing in the record indicates that Zurich in fact delegated to Maguire its authority to construe the Plan or make a determination of whether to pay the Kovaches' claim. Zurich initially set aside
$125,000 of reserves for the claim, the full amount that the Kovaches would have been entitled to if their claim had been allowed. But after Zurich received Mr. Kovach's medical and toxicology records, it reduced the reserves to $10 because "this matter may be a potential denial." Zurich's letter to Maguire seeking a legal opinion stated: "[E]nclosed please find copy of [the] file for your review and if in agreement, the drafting of the denial based on policy provisions." After receiving Maguire's opinion letter, Patricia Lane of Zurich communicated to the claims specialist assigned to the claim: "You have my authority to deny the claim and prepare and release the letter of denial today." The claim denial sent to the Kovaches incorporated language from Maguire's opinion letter, but was on Zurich letterhead and was signed on behalf of the company. Zurich, not Maguire, made the final decision regarding the Kovaches' claim.

To the extent that the Kovaches argue that de novo review should apply because Zurich's use of an outside expert advisor was not explicitly authorized by the Plan, that argument is not properly before us because the Kovaches did not raise it before the district court. See Chandler v. Jones, 813 F.2d 773, 777 (6th Cir. 1987) ("It is a well established principle of appellate review that appellate courts do not address claims not properly presented below."). But this contention, even if it were properly before us, lacks any support in the caselaw. Zurich's retention of outside counsel to assist it in its claim determination would in fact seem to demonstrate that it took the process seriously and attempted to ensure that its decision had a strong legal basis. See, e.g., Karras v. First Colony Life Ins. Co. Pension Plan, No. 6:05-cv-00031, 2006 U.S. Dist. LEXIS 18969, at *22 (W.D. Va. Apr. 13, 2006) ("[T]he fact that the Plan Administrator hired and relied upon outside legal counsel bolsters its final conclusion.").

The Kovaches have not demonstrated that Zurich's retention of Maguire amounted to the sort of improper delegation of authority that would require us to apply a de novo standard of review to Zurich's decision. We will thus proceed to examine
Zurich's denial of the Kovaches' claim under the arbitrary-and-capricious standard.
C. Zurich's denial of coverage

Zurich denied coverage because it determined that Mr. Kovach's injuries were not the result of an "accident," but were the "reasonably foreseeable consequence of driving while highly intoxicated and under the influence of drugs." Moreover, Zurich
decided that Mr. Kovach's injuries fell under the Plan's self-inflicted-wound exclusion because he "intentionally ingested a significant quantity of alcohol and apparently opiates and benzodiazepines, and his injury occurred as a result of polysubstance intoxication." Zurich based this conclusion on a body of federal common law from within this circuit addressing allegedly similar scenarios.
We note at the outset that drunk driving is ill-advised, dangerous, and easily avoidable. But, as will be discussed in more detail below, so are many other activities that contribute to wrecks that a typical policyholder would consider "accidental." We
must thus refrain from allowing our moral judgments about drunk driving to influence our review of Zurich's interpretation of the relevant Plan provisions.

D. Whether Lennon controls

The sole published decision of this court that has dealt with the issues now before us is Lennon v. Metropolitan Life Insurance Co., 504 F.3d 617 (6th Cir. 2007). That case involved what the court described as "grossly negligent," "reckless drunk driving," id. at 618, 624, and resulted in three separate opinions-a lead, a concurrence, and a dissent. Lennon was insured under an ERISA-covered personal accident insurance (PAI) policy. On the day in question, he drove his car at a high rate of speed the wrong way down a one-way portion of a divided street, losing control of his vehicle. The car hit a curb, flew into the air, and slammed into a brick wall, killing Lennon. Lennon's BAC was later measured at .321, more than three times the legal limit in effect at the time (.10) and high enough to render him only semi-conscious. See Blood Alcohol Levels and Metabolism, http://www.radford.edu/~kcastleb/bac.html. Death has been documented to occur at BACs starting at .35. Id.

Lennon's PAI policy provided in pertinent part as follows:

If, while insured for Personal Accident Insurance, an [insured] sustains
accidental bodily injuries, and within one year thereafter shall have
suffered loss of life . . . as a direct result of such bodily injuries
independently of all other causes, [MetLife] shall pay the benefit
specified for such Losses.

Lennon, 504 F.3d at 619 (alterations in original). MetLife denied benefits to Lennon's estate, noting in its denial letter that Lennon's BAC was three times the legal limit and that "[t]he act of driving impaired . . . rendered the infliction of serious injury or death reasonably foreseeable and, hence, not accidental." Id. at 620. It thus concluded that Lennon's death was not "directly the result of accidental injuries, independent[] of all other causes." Id.

The lead opinion concluded that MetLife had not acted arbitrarily and capriciously in denying coverage for Lennon's death. Id. at 620-21. Borrowing terminology from tort law, the lead opinion characterized Lennon's behavior as "grossly negligent." Id. at 621. It therefore reasoned that "in extreme cases courts may treat wanton misconduct more like an intentional tort than like negligence[,]" id. (quoting Dan R. Dobbs, The Law of Torts § 147, at 350-51 (2000)), and that a plan administrator
could similarly "treat such conduct as not accidental under a policy that only covers accidents." Lennon, 504 F.3d at 621.

The lead Lennon opinion also stated that the number of cases holding that drunk driving wrecks are not accidents "independently supports the conclusion that MetLife's determination was not arbitrary and capricious." Id. at 622-23 (collecting cases). On this point, the concurring opinion agreed. Id. at 625-26 (Boggs, C.J., concurring). Importantly, though, the lead opinion specifically cautioned that

we do not reach the question of whether a fiduciary can reasonably deny
"accidental" benefits for [an] injury that results from any negligent or
any illegal behavior, or from driving while only somewhat impaired.

Id. at 624 (emphasis added). The concurring opinion, moreover, made clear that the majority's holding did not reach the question of whether to approve or disapprove of MetLife's use of a "reasonably likely to occur" standard for defining what is an "accident," and further noted that its conclusion was based on "the set of facts presented here . . . ." Id. at 626.

Although the insightful analyses from all three of the Lennon opinions are highly informative for our present review, Lennon is distinguishable and therefore not controlling. The most obvious distinction is the disparity between Lennon's and Mr. Kovach's BACs-.321 versus .148. Lennon's BAC was more than twice that of Mr. Kovach's and more than four times the legal limit (.08) in place at the time of Mr. Kovach's wreck. The lead Lennon opinion further acknowledged that "drivers with
blood-alcohol levels above the legal limit as a group are far more likely to arrive home safely than drivers who are extremely drunk." 504 F.3d at 623 (emphasis added) (citing Stamp v. Metro. Life Ins. Co., 466 F. Supp. 2d 422, 432 (D.R.I. 2006) ("The statistics . . . are meaningless in this context. . . . They do not consider . . . the degree of his intoxication.)). For this reason, the Lennon majority refused to impose a blanket standard allowing insurers to consider injuries resulting from any wreck in which the driver is intoxicated as nonaccidental. Id. at 624. Compared to the dangerously high level of intoxication involved in Lennon, Mr. Kovach's intoxication appears to fall into the "somewhat impaired" category that Lennon declined to address.

Lennon is distinct from the case before us in other ways as well. The lead opinion was careful to note that the circumstances of Lennon's crash were extreme:

This case involved facts-Lennon's extremely high blood-alcohol
content, the manner in which Lennon's car flew off the road, the lack of
an alternative explanation for the death, and Lennon's driving the wrong
way down the street-that rendered at least reasonable MetLife's
conclusions that Lennon did not die as a result of an "accident" under the

Id. at 622. We agree with the Lennon lead opinion that driving the wrong way down a one-way street while drunk to the point of semi-consciousness, and at a rate of speed so fast that the vehicle is on the verge of becoming airborne, amounts to a level of recklessness that would render the resulting injuries highly likely, and therefore not accidental.

The facts surrounding Mr. Kovach's crash, however, are nowhere near as dramatic as those in Lennon. Besides driving while intoxicated-at a level less than half that of Lennon-the only other out-of-the-ordinary thing that Mr. Kovach did was run
a stop sign, something done with unfortunate frequency by sober drivers. There is no indication in the record that Mr. Kovach was traveling at an abnormally high rate of speed or driving in an otherwise risky manner.

Finally, we note that Zurich did not-and could not-have relied on Lennon in its review of the Kovaches' claim. The Lennon opinion was issued more than a year after the Kovachs' claim was formally denied by Zurich.

Our dissenting colleague, however, contends that we have overlooked two critical factors in our analysis: (1) that Mr. Kovach was riding a motorcycle, which the dissent characterizes as "an especially dangerous form of transportation," and (2) that
he was "intoxicated on opiates" at the time of the accident. (Dissenting Op. at 25-26). According to the dissent, these two "overlooked" factors establish that Mr. Kovach's behavior was as risky as Lennon's, and that an accident under such circumstances was "highly likely" to occur. (Dissenting Op. at 31, 33) But the record does not support either contention.

First, with regard to the motorcycle argument, the statistics cited by the dissent show at most an increased likelihood of death or injury during a motorcycle crash, not an increased likelihood of a crash as an initial matter. (Dissenting Op. at 30-31) But the latter, not the former, is the relevant event in the instant case. Moreover, in making its coverage decision, Zurich did not rely on the fact that Mr. Kovach was on a motorcycle when the accident occurred, so whether a motorcycle is a particularly dangerous form of transportation is irrelevant to our analysis. See Shelby County Health Care Corp. v. Majestic Star Casino, LLC, 581 F.3d 355, 368-69 (6th Cir. 2009) (holding that a plan administrator cannot support its argument on appeal with a fact not relied upon in its initial coverage determination).

Second, the dissent infers that Vicodin, an opiate, was in Mr. Kovach's system at the time of the accident because he had a prescription for the drug. (Dissenting Op. at 27) But a prescription alone is not sufficient proof that Mr. Kovach was actually
taking the drug, or that it was still in his system at the time of the accident. The Physicians' Desk Reference cited by the dissent simply states that Vicodin "may impair" mental or physical abilities. (Dissenting Op. at 28) This is not proof that it did so for Mr. Kovach, and certainly does not show that the collision was "highly likely" to occur even if some of the drug was still in his system at the time of the accident. (See Part II.E.6. below for a discussion of the "highly likely" standard to be applied in determining whether an event is "accidental.")

Furthermore, Zurich could have obtained the relevant records from the Robinson Memorial Hospital (the first hospital to which Mr. Kovach was taken) if it had wanted to, records that would have allegedly established that Mr. Kovach was on Vicodin at the time of the accident. Zurich apparently decided not to pursue the issue despite the fact that it had the burden of proving that Mr. Kovach was under the influence of Vicodin at the time of the accident. Moreover, because Zurich did not pursue the matter and did not rely on the Vicodin-related argument in denying coverage, it is not relevant to our analysis. See Majestic Star Casino, LLC, 581 F.3d at 368-69.

E. Zurich's definition of "accidental"

Having determined that Lennon does not control the case before us, we are left to examine Zurich's denial of benefits based on its interpretation of the term "accidental" as not including drunk-driving wrecks. Our task is not to address whether that decision was correct. Instead, the question before us is whether it was arbitrary and capricious. We answer that question in the affirmative.

The central focus of our review is whether Zurich's interpretation of the term "accidental," as used in the Plan, was reasonable. See Morrison v. Marsh & McLennan Cos., 439 F.3d 295, 300 (6th Cir. 2006) (stating that an administrator's interpretation of plan provisions will be upheld if it is reasonable). ERISA requires that benefit plans must be "written in a manner calculated to be understood by the average plan participant." 29 U.S.C. § 1022(a). Accordingly, "[i]n interpreting a plan, the administrator must adhere to the plain meaning of its language as it would be construed by an ordinary person." Morgan v. SKF USA, Inc., 385 F.3d 989, 992 (6th Cir. 2004). "[A]n insured should not have to consult a long line of case law or law review articles and treatises to determine the coverage he or she is purchasing under an insurance policy." Walker v. Metro. Life Ins. Co., 24 F. supp. 2d 775, 780 (E.D. Mich. 1997) (quoting Harrell v. Minnesota Mut. Life Ins. Co., 937 S.W.22d 809, 814 (Tenn. 1996)).

1. Ordinary meaning

We have little doubt that an ordinary person would characterize Mr. Kovach's collision at the intersection to be an accident. Webster's dictionary offers the following pertinent definition of the word "accidental":

2 a: occurring unexpectedly or by chance b: happening without intent or
through carelessness and often with unfortunate results

http://www.merriam-webster.com/dictionary/accidental. Mr. Kovach's wreck clearly fits this definition in that he did not "expect" or "intend" to hit another vehicle. Rather, he "carelessly"-or, more accurately, negligently-ran a stop sign, with the "unfortunate result" that he was injured in the ensuing collision.

A hypothetical witness placing a 911 call to report Mr. Kovach's crash would almost certainly have reported that he or she had just seen an accident. Indeed, Zurich's own language throughout the administrative record reflects that Mr. Kovach's wreck was considered to be an accident in the ordinary sense of the word. In particular, the company frequently referred to the crash as an accident in its own documentation regarding the claim:

Committee determined that the issue regarding which party was at fault
for the accident which resulted in the Insured's loss requires further

[The Committee] deferred its decision pending receipt of clarification
from the relevant law enforcement authorities regarding which party was
at fault in the accident at issue.

[The] claim is to be referred for legal opinion regarding the accident and
alcohol involvement.

Atty advised that dscepancies [sic] in records regarding cause of

Upon receipt of the medical records from Robinson Hospital and driving
record, loss will be referred for legal coverage opinion, as the claimant
was intoxicated at the time of the accident.(Emphasis added.)

2. Zurich's reliance on caselaw

Zurich defends its interpretation of the word "accidental" almost entirely on the basis that it relied on a body of caselaw holding that drunk-driving wrecks are not accidents for ERISA purposes. But in this case, where Mr. Kovach's intoxication and the circumstances of his accident were by no means extreme (as they were in Lennon), we conclude that Zurich was unreasonable in relying solely on caselaw to justify its denial of benefits to the Kovaches. This court has held, in the ERISA context, that even under the highly deferential arbitrary-and-capricious standard, courts have

an obligation under ERISA to review the administrative record in order
to determine whether the plan administrator acted arbitrarily and
capriciously in making ERISA benefits determinations. This obligation
inherently includes some review of the quality and quantity of the . . .
evidence and the opinions on both sides of the issues. Otherwise, courts
would be rendered to nothing more than rubber stamps for any plan
administrator's decision . . . . Even under the deferential review we will
not uphold a termination when there is an absence of reasoning in the
record to support it.

McDonald v. W.-S. Life Ins. Co., 347 F.3d 161, 172 (6th Cir. 2003) (citation omitted). Moreover, the cases Zurich relied upon in its denial of benefits-Jones v. Metropolitan Life Insurance Co., 385 F.3d 654 (6th Cir. 2004); Nelson v. Sun Life Assurance Co. of Canada, 962 F. Supp. 1010, 1012-13 (W.D. Mich. 1997); Walker v. Metropolitan Life Insurance Co., 24 F. Supp. 2d 775, 780-81 (E.D. Mich. 1997); Miller v. Auto-Alliance International, Inc., 953 F. Supp. 172, 175-77 (E.D. Mich. 1997); Cates v. Metropolitan Life Insurance Co., 14 F. Supp. 2d 1024, 1027 (E.D. Tenn. 1996); and Fowler v. Metropolitan Life Insurance Co., 938 F. Supp. 476, 480 (W.D. Tenn. 1996)-do not uniformly support Zurich's position.

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